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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Welcome to the strange inner world of ‘moral equilibrium’

Former federal prosecutor Serina Vash told the Harvard Business Review in 2016: “When I first began prosecuting corruption, I expected to walk into rooms and find the vilest people. I was shocked to find ordinarily good people I could well have had coffee with that morning. And they were still good people who’d made terrible choices.”

The question of how seemingly good people can act unethically is still relevant in 2021.

The truth is that explaining unethical behavior is very complex as there are many cultural, personal, and contextual factors that define people’s actions and decisions.

One factor is a psychological phenomenon known as moral equilibrium

According to behavioral research, each of us maintains a moral identity that we keep in equilibrium by engaging in “good” or “bad” behaviors. We balance our moral choices by constantly comparing our self-image of a good person with our actual behavior. In other words, we keep a running scorecard in our heads, balancing our current moral self-perception with our own ethical standards called a moral reference point.

When we act in ways that are not in line with it, we feel bad and actively look for an opportunity to do something moral and regain equilibrium. This is called moral compensation.

On the flip side, we may give ourselves permission to act unethically to find the balance between the two sides again after we behaved ethically. This is called moral licensing. 

In one study supporting these assumptions, the researchers asked two groups to write a short story about themselves using morally negative (e.g., selfish, mean) or morally positive (e.g., fair, kind) trait words. At the end of the study, both groups were asked to donate to charity. Consistent with the moral compensation concept, the first group donated more than the second group. The first group was “compensating” for feeling immoral. The second group was practicing moral licensing – focused on their own goodness; the participants felt entitled to act selfishly.

What does all of this have to do with corporate ethics and compliance?

Misconduct is not always a deliberate decision or bad intention. Instead, moral choice is a dynamic process. An effective E&C program should take that into account and seek to impact the internal dynamics of moral choice making. Some of the suggested ways to do that are as follows:

  • Raising the corporate moral reference point by articulating clearly your company’s ethical expectations. This would allow employees to benchmark their own behaviors against higher ethical standards.
  • Encouraging employees to reflect on the ethical consequences of their actions. At certain times all of us can fall short of our own ethical standards – giving proper consideration to the dissonance between the moral reference point and the actual behavior can lead to more ethical choices in the future.
  • Teaching employees to recognize the possibility of moral licensing. Attending an E&C training itself can excuse doing something unethical afterward, so it’s important to equip the trainees to look out for the effect in their own day-to-day behavior.

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